I am not sure how I ended up listening to the Monero Talk podcast, but it was one of the habits established during Covid that made things a little easier. Listening to Douglas and Sunita's discussions and fun guest interviews helped provide the levity I needed. I loved their energy and unwavering enthusiasm for the project. I was never interested in money systems, but Monero Talk changed that. It is therefore no surprise that I soon began to explore Monero and try it for myself.
Privacy digital coin
As you'll hear often on the show, Monero is one of a handful of cryptocurrencies that comes close to physical cash. The beauty of cash is that it allows transactions no bank or other body can trace. Cash is an important tool for privacy, but one that feels like it's being phased out.
Monero literature, media and enthusiasts tell us that 'XMR' works like cash. The community of developers for Monero are also constantly working on improving the software, so it gets as close to being untraceable as possible, no easy feat in a digital environment.
There are a lot of excellent tutorials and even documentaries on how cryptocurrencies work. In short, the ledger, or record, that our banks normally keep of our incomings and spendings is decentralised with crypto. This removes the need for a bank, putting the full responsibility on the user to manage their own finances. This gives the user more control, but also makes making mistakes brutal.
Monero takes privacy one step further by hiding the transactions and records.
Kraken exchange and KYC
Transactions with cryptocurrencies always risk leaving some kind of digital trail. If you want to change fiat money (our regular currencies, like USD, Euro, Pound, etc.) for a cryptocurrency like Bitcoin, Ethereum or Monero, you have to find a person or institution willing to make the exchange in a fair and trustworthy way.
The most 'mainstream' approach is to sign up with a cryptocurrency exchange platform. After some research, I discovered Kraken was a major platform that would allow me to exchange fiat money for XMR.
Here came the first surprise: to sign up to Kraken, I had to reveal quite a bit about myself in order to prove my identity. I was even asked to scan my ID and send it to Kraken in digital form! This process is called KYC, or Know Your Customer. KYC seemed counter to the idea of cryptocurrencies, but I went ahead with it, because Kraken seemed one of the few avenues for buying Monero that felt mainstream.
Once my account was up and running, I needed to send fiat currency from my bank to my Kraken account first, so I could exchange that for Monero later. I felt nervous about sending real money to this account from my bank, in part because transactions take time. So I tested everything with a small amount first, found it worked and then sent a larger sum.
I had to watch several tutorials to learn how to make an exchange from fiat to XMR on Kraken. I won't explain all of that here—there is an abundance of crypto media out there—but I will add that Kraken recently greatly simplified their free exchange tool, making what I learned moot. The cost of this increase in simplicity is a reduction in control and much higher trading fees.
I successfully exchanged fiat to Monero on Kraken, though I found the process, and the ensuing responsibility of being my own bank, quite a hair-raising experience. The exchange takes time—30 minutes at least—and when you're new to it all, you can't help but worry you may have just sent your hard-earned money into a black hole. This feeling is deeply associated with cryptocurrency transactions; I imagine it never really goes away.
Kraken has a policy not to allow a withdrawal the first 72 hours after the first deposit, though you can trade during that time.1
Start managing your Monero
The most common response I get when I persuade a friend of family member to obtain some Monero is:
"Ok, now what?"
This is a valid question, which I will come to in a moment, but first let's look at what you need to do on your end as a beginner to manage your newly acquired Monero.
One of the important lessons I learned from listening to Monero Talk was to remove your XMR from exchanges, because otherwise then you are relying on a third party to secure your funds. We do this with banks, and of course that comes with its own risks, but crypto exchanges are less stable, as the news over the past few years has shown us.
What you need is a digital wallet for Monero that you manage yourself. There are several options here, but I will just go ahead and recommend one of the simplest options, which is installing Cake Wallet on your phone.
Once you've installed Cake Wallet, you can create a new wallet, which will generate your send and a receive addresses, which look like long strings of alpha-numeric symbols and/or QR codes. You do not need to store these; they will be accessible as long as the wallet is active.
There is one piece of information you must record, and that is your wallet seed, a list of 25 random words. This seed is the key to starting up your wallet again, for example, on a new device in case of losing your phone.
The 25 word seed is the key to recovering your XMR. The rest is not nearly as important.
Many XMR holders physically write down their wallet seeds, as digital records can be hacked.2 Should anyone get hold of your wallet seed, they can spin up your wallet on their own device and remove your funds.
You are by now probably getting a sense of the downside of holding a privacy currency like Monero. There is no insurance for lost funds, as we have come to expect with a bank, because you are the bank. Making mistakes (typing the wrong send address, losing your wallet seed) can lead to loss of funds.
The roller coaster of value
I have no experience in trading, and so began to watch with great interest as the fiat value of the Monero that I owned began to go up a little! I used a website called CoinGecko to track this. I find their charts the easiest to read.
A few quick calculations made me realise that the more Monero I bought, the more actual fiat money I could make, just by paying attention to the graphs, so I exchanged some more. As a turns out, this was not the best approach for two reasons. The first is that Monero's fiat value dropped soon after that, which put me in a position of not knowing whether to sell my Monero and get out, or be patient and wait. I was new, not just to crypto, but to the concept of trading, and, as it turns out, I am not very good at it. Monero continued to decline in value (2022) and I decided to just wait and see. The second reason why Monero is not ideal for trading is that it is intended to be used as digital cash, a tool for spending.
I've learned since not to worry about price, and instead focus on the range of fluctuation of Monero's fiat value, and to try to buy and sell Monero at a fair rate.
If Monero is not really intended to be used as a get rich quick tool, then what is it for? It is the number one currency on the dark web and black markets, which means it is getting a good bout of testing of its security and privacy, but I personally have no business there.
Here are some practical applications for Monero:
- tipping privacy content creators
Privacy and security content creators such as The Surveillance Report accept financial donations in Monero. Because transactions are private, the receiver can put their receive address and/or QR code anywhere on the web. The tipper just needs scan the QR code with their Cake Wallet app, decide on the amount, and send it over. The digital transfer is as private as is possible today.
- spending XMR on privacy tools
I pay for a VPN tool called Mullvad with XMR. Mullvad sends me a number code which I type into the app, and that's it: no exchange of identifying information. I highly recommend making a purchase like this, because doing so really brings to light the extent to which regular online transactions are riddled with identity hooks. The way I pay for Mullvad with XMR makes me feel more hopeful for a working digital version of cash that doesn't trace your transactions.
- Monero shops and using gift cards
One way to spend Monero on goods is via online shops. Browsing these shops feels like the early days of second-hand sales sites like eBay; there are a lot of gaps today, but there is potential for growth. Monero enthusiasts often talk about the hope for a circular economy (meaning spending only Monero for products and using Monero you've made to buy other products), which feels far off, but I hope will be possible one day.
Another method is to buy gift cards for the larger mainstream shops and turn your Monero into spendable fiat that way.
- onboarding others
A simple way to introduce newcomers to Monero is to encourage them to download Cake Wallet by sending them a small amount of Monero. I know Douglas Tuman tries to get waiting staff to accept tips in Monero, and is often successful in doing so. I have sent some XMR to friends, my partner and my children, but fear they won't manage their wallet seeds.
Getting out of KYC
KYC stands for Know Your Customer. I've already written about how much identifying information an exchange like Kraken needed from me before I could get started. Recently, I received an email from them asking for even more information about me!
I began to see that using crypto exchanges that rely on KYC defeat the purpose of digital cash. While it is possible to exchange fiat for another cryptocurrency, like Bitcoin, and then exchange that for Monero (which is very easy to do within the Cake Wallet app, by the way!), I decided to exchange all my Monero (at a loss, sadly) back into fiat currency via Kraken, and stop using that account.
LocalMonero is an exchange that does not require KYC, but does require a high level of trust. LocalMonero is a type of peer-to-peer exchange system, not unlike second-hand goods trading platforms. The reliability of sellers and buyers is displayed in a rating system, showing the number of exchanges and average user feedback rating.
Using LocalMonero does feel a little like entering the wild west. You'll need to spend some time figuring out how to use the filters to the find the right buyer for you. Cash exhanges—literally, sending money in an envelope!—are cheapest, while exchanges with more identifying information, like a fiat bank transfer to the seller, also have higher fees.
I have made a few small trades like this, and it has gone well. I should be honest here and say they were all accompanied by a feeling of unease, but the same is true for purchases on eBay.
Here are a few pointers I have learned from using Monero thus far:
- keep things simple and download a wallet trusted by the community, like Cake Wallet
- pay a lot of attention to how you record and secure your wallet seed
- test things out with small amounts before sending the full sum; Monero sent to a wrong or non-existent address is the equivalent of lighting cash on fire
- for starters, only exchange fiat money you can afford to lose
- don't fall into the trap of hoping you'll get rich from Monero's fluctuating value; view it as a tool for private online spending instead
- the value of Monero seems to fluctuate between 140 to 170 USD, with occasional extreme peaks or dips; a trade for normal amounts within the 150 - 170 USD range seems fine to me
- studying charts and watching analysis reports or YouTube tutorials doesn't come close to being invested yourself; ownership of Monero is the most effective way to learn and get a sense of how and when to trade
- make sure you try currency comparison graphs with time period settings, from daily to yearly, so you don't fool yourself into thinking that a dramatic-looking daily rise or fall is significant
Being your own bank is stressful and mistakes can lead to real financial loss. There aren't enough places to spend your Monero as of yet, which is annoying, because Monero is intended to be used more like digital cash rather than a value store like Bitcoin or gold. But things are slowly improving, and I hope and believe there will be a real practical use for Monero as physical cash begins to disappear and banks and governments gain even more granular surveillance over us with their own highly traceable digital form of cash called CBDC.
At the moment, I don't own Monero, because I wanted to get out of KYC and Kraken after further requests from them about my identity. I exchanged all the Monero I owned back to fiat and printed out the record of that exchange. We'll see what the future holds.
I have learned to mine XMR, which is far from lucrative, but very interesting to do. I'll describe that process soon.
What Is Digital Privacy?
Tip SR using Monero:
Pay for Mullvad VPN using Monero:
Merchants & exchanges
Weekly Monero Report
Central Digital Bank Currency, or CBCD
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Caution is directly proportional to value here. If you are just experimenting with a small amount, then copying your wallet seed to a secure password manager might be fine too. If you want to manage large amounts of Monero, I recommend investigating paper wallets and running your wallet on a secure operating system, like Qubes OS, or GrapheneOS on phones.↩